Tribunal Upholds Decision Rejecting Claims; Relief Inadmissible; Appeal Dismissed

The Tribunal upheld the decision of the 'Adjudicating Authority' to reject the claims of the 'Appellants' due to insufficient documentary evidence. Additionally, the Tribunal ruled that the relief sought by the 'Appellants' for payment from the contingency fund was inadmissible as the 'Resolution Plan' had been successfully implemented and the fund was to cover contingent claims not determined at the time of the plan's approval. The appeal was dismissed by the Tribunal, affirming the 'Impugned Order' passed by the 'Adjudicating Authority'.

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Issues Involved:

1. Whether the 'Resolution Professional' was right in rejecting claims of 'Appellants' with reasoning that the documents were not enough to establish their claim.
2. Whether the relief sought by the 'Appellants' for payment of Rs. 62,31,242/- towards claim from contingency fund is admissible.

Issue-wise Detailed Analysis:

Issue No. (I): Whether the 'Resolution Professional' was right in rejecting claims of 'Appellants' with reasoning that the documents were not enough to establish their claimRs.

(a) The Appellant objected to the reasoning followed by the 'Resolution Professional' in rejecting claims, citing the unavailability of proper documents necessary to prove an 'Operational Debt' as per Section 9(3) of the I & B Code, 2016.

(b) The Tribunal noted that the 2nd Respondent had no access to the 'Corporate Debtor's books of accounts and records, and the 'SAP portal' to verify the Appellant's claim. This proved to be a handicap for verifying the claims, especially when the Appellant failed to furnish the required documents.

(c) Section 31 of the I & B Code, 2016, mandates that once a resolution plan is approved, it shall be binding on the corporate debtor and all stakeholders, ensuring a clean slate for the future.

(d) The Tribunal considered the Supreme Court's decision in Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited, which emphasized that once a resolution plan is approved, all claims not part of the plan stand extinguished.

(e) After the direction of the 'Adjudicating Authority' on 26.07.2019, the claims were admitted but found unsupported by necessary documents during verification. The Appellant could not furnish the required documents, leading to the rejection of the claims.

(f) The Tribunal referenced its earlier judgment in Santanu T. Ray vs Tata Capital Financial Services, which highlighted that claims filed beyond the stipulated time could not be entertained.

(g) The Tribunal upheld the decision of the 'Resolution Professional' and the 'Adjudicating Authority' to reject the claims based on insufficient documentary evidence.

Issue No. (II): Whether the relief sought by the 'Appellants' for payment of Rs. 62,31,242/- towards claim from contingency fund is admissibleRs.

(a) Contingency Fund is a provision in a 'Resolution Plan' to cover inevitable losses of creditors, including uncertain and pending liabilities.

(b) The I & B Code, 2016, emphasizes a time-bound 'Corporate Insolvency Resolution Process' aimed at reviving the 'Corporate Debtor' rather than recovery enforcement.

(c) Regulation 14 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, mandates the 'Resolution Professional' to estimate and create a provision for contingent claims in the 'Resolution Plan'.

(d) The 'Resolution Plan' is a rehabilitation plan targeting legal, financial, management, and technical strategies to revive the 'Corporate Debtor'.

(e) The Tribunal noted that the 'Contingency Fund' was maintained for six months from the date of approval of the 'Resolution Plan'. The Appellant failed to substantiate claims with necessary documents during this period.

(f) The Tribunal observed that the 'Resolution Plan' was successfully implemented, the 'Successful Resolution Applicant' took over management, and the 'Monitoring Committee' ceased to exist.

(g) The Tribunal emphasized that the Contingency Fund is for claims not determined and settled at the time of the 'Resolution Plan'. Once the fund is exhausted and the plan is fully implemented, no further claims can be entertained.

(h) The Tribunal upheld the decision of the 'Adjudicating Authority' on this issue.

Conclusion:

The Tribunal agreed with the decision of the 'Adjudicating Authority' (National Company Law Tribunal, Chennai Bench-II) and sustained the 'Impugned Order' passed in IA/IB/920/2020 in CP/280/IB/2018. Consequently, the appeal was dismissed as devoid of merits.

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